An Account of the World’s Top Five Nations That Experienced the Most Inflation
Inflation is a term best defined as the rate at which the average price level of a basket of selected goods as well as the services in a given economy tend to increase over a time period. Moreover, in inflation, we can observe that the general level of prices increase without a subsequent rise in purchasing power of a given unit of currency, as a result of which inflation is known to be an indicator of a decrease in the purchasing power of a given currency. Diving deeper, it can be said that inflation causes a single unit of currency to lose its purchasing power, due to which a given unit of currency can only afford fewer goods or services when compared to the past. Inflation is mostly observed when there is excess money supply outpacing a country’s economic growth. Continuing on the subject, let us explore a few nations that have suffered from pangs of inflation.
Malawi, better known as the Republic of Malawi is a tiny country residing in the continent of Africa. Amongst the world’s most underdeveloped nations, Malawi shot to spotlight when the pop sensation Madonna adopted a Malawian boy from an orphanage. The country’s double-digit inflation can be attributed to the mishandling of external borrowing by the government. As an effort to counter-balance the country’s mountain of external debt, the government introduced unfair taxes and has gone to an extent of removing zero rating on basic commodities too. The Malawian citizens are apparently fully aware of their country’s economic state and are disgruntled by the uncalled tax collections.
Angola is another African nation facing an entirely different set of difficulties when compared to Malawi. The country’s currency Kwanza cannot be taken out of the country and any attempts at doing so are deemed illegal. Angola is primarily reliant on exporting oil, and much like any other oil exporting country, Angola is suffering from the fall of oil prices. With more than 90% of the country’s export income coming from oil, the sudden downwards spiral of oil prices from $100/barrel to $26/barrel made matters worse. Luanda, the country’s capital is frequently featured as one of the world’s most expensive cities; nonetheless, over-reliance on oil combined with political instability and severe income disparities have pushed the country into a deep pit of inflation.
One of South America’s smallest countries, Suriname is small, both geographically and population wise as well. Unlike most other South American countries, Suriname’s most widely spoken official language is Dutch, but not Spanish. While generally away from the limelight, Suriname is now making the rounds in the news due to its uncontrollable rates of inflation. As a result of inflation driven hikes in the price of electricity and water, the country’s capital was flooded with angry protestors who bringing the government to its knees. Falling prices of gold and oil, combined with the country’s only bauxite mine and alumina plant’s shutdown has resulted in a slew of unforeseen consequences. Despite the Central Bank’s measures of implementing a tighter monetary policy, there hasn’t been much of a change in the country’s condition.
South Sudan (476.02%)
Located in the northern part of Africa, South Sudan gained independence from the Republic of Sudan in the year 2011. Also known as the youngest nation of the world, South Sudan suffers from the dire consequences of record-high inflation. Constantly engaged in a crisis with Sudan, along with a reduction in crude oil production has led the economists to believe that the country may suffer from bouts of inflation-related problems well into the future.
While South Sudan might quantitatively qualify as the nation that experienced the most inflation, Venezuela still outranks South Sudan in terms of inflation as it is known as one of the most dysfunctional economies in the world. On top of inflation, Venezuela has a host of other problems including food and medicine shortages, and frequent power outages. For a better understanding of the country’s problems, consider the inflation rate of chicken price: 700%. The food shortage problem started after the country’s invasive government sanctioned an internal embargo on food imports, leading to shortages and diminished medicine supplies. Venezuela is suffering from inflation for several years in a row and according to the International Monetary Fund, it is estimated that Venezuela may continue experiencing inflation well until the end of 2019. Venezuelan Bolivar, the country’s currency is currently known as the worst performing currency of the world. Venezuela, much alike other oil-exporting countries as mentioned above, has fallen prey to the sudden fall in oil prices. The country’s totalitarian regime alongside a mountain of debt has lost Venezuela a vote in the General Election of the UN as well. It was estimated that Venezuela owes up to $15 billion dollars in debt and is running short of both cash supply and gold reserves.
According to economists, issues such as inflation-related currency hikes can be tackled through the adoption of a currency board system. Such a system issues currency that is “convertible on demand into a foreign anchor currency at a fixed rate of exchange.”